Costco shareholders recently dismissed a proposal that called for the company to assess potential risks related to its diversity, equity, and inclusion (DEI) practices.
Preliminary results from Costco’s annual meeting indicated that over 98% of the shares voted against the measure, which was put forth by the National Center for Public Policy Research, a conservative think tank based in Washington, D.C.
The organization contended that the DEI initiatives at Costco could pose various risks including litigation, reputational damage, and financial repercussions, ultimately affecting shareholders as well.
This think tank previously put forth a similar request to Apple and pointed to a U.S. Supreme Court ruling from July 2023 that prohibits affirmative action in college admissions as part of its rationale.
However, Costco’s board of directors unanimously recommended that shareholders reject the proposal, stating that their commitment to fostering an environment of respect and inclusion is both appropriate and essential.
They emphasized that the report requested by this proposal would not yield any significant additional insights.
According to the board, having a diverse workforce and supply chain contributes to creativity and innovation in their products and services, which in turn enhances customer satisfaction among their members.
Neil Saunders, managing director at GlobalData’s retail division, suggested ahead of the meeting that the proposal was likely to face rejection, reflecting general confidence in Costco’s leadership.
He noted that there is a prevalent sentiment of maintaining the current successful approach rather than introducing unnecessary risks.
In contrast to Costco’s stance on DEI initiatives, other major brands like Walmart, McDonald’s, and John Deere have recently taken steps back from similar practices.
Last week, over 30 Walmart shareholders requested their CEO to delineate the business implications of scaling down DEI policies, terming such actions as “disheartening.” Major technology firms including Amazon and Meta parent company of Facebook and Instagram have also rolled back their DEI commitments.
These shifts have gained momentum following the Supreme Court’s affirmative action decision, which has encouraged conservative organizations to file lawsuits against corporate DEI initiatives, arguing they discriminate against individuals not part of historically marginalized groups.
In line with these developments, Trump signed an executive order aimed at dismantling DEI programs within federal agencies, reflecting a long-standing criticism from conservatives who argue such initiatives violate constitutional principles by considering traits like race and gender.
The strategy involves harnessing the Justice Department and other bodies to scrutinize private companies that implement training and hiring practices deemed discriminatory against individuals outside minority groups.
As for Costco, the National Center for Public Policy Research claims that around 200,000 of its 300,000 global employees are likely experiencing potential discrimination due to their identity as white, Asian, male, or heterosexual individuals.
The organization cautioned that if even a small fraction of these individuals were to take legal action against Costco, the financial implications could be severe.
While the company employs a chief diversity officer, its leadership team reportedly lacks representation that mirrors its customer base. As indicated on its website, last year nearly 81% of Costco’s executives were white, and 72% were male.
Costco has adopted a notably unconventional approach in various aspects of its business model. For example, the company operates without an official corporate public relations department and has not prioritized developing its online commerce as aggressively as competitors like Walmart and Target.
Looking ahead, the National Center for Public Policy Research plans to present a more extensive proposal at Apple’s upcoming shareholder meeting in February, seeking to eliminate its DEI department and programs, labeling them as excessively radical compared to typical corporate practices.
Apple’s board is expected to recommend against this proposal, asserting that the company is committed to cultivating a culture where everyone feels included and can perform their best work.
Meanwhile, Jamie Dimon, CEO of JPMorgan, reaffirmed his support for expanded diversity initiatives during a recent CNBC interview, indicating his focus on outreach to underrepresented communities, regardless of political affiliations.
The actions taken by the Trump administration this week could amplify legal challenges for companies standing firm against the conservative opposition to DEI, as noted by David Glasgow, the executive director of the Meltzer Center for Diversity, Inclusion, and Belonging at NYU School of Law.
He pointed out that many large corporations would have engaged their lawyers following the Supreme Court’s ruling and confidently maintained their existing DEI strategies, advising organizations like Apple to remain resolute in their commitment.
